The Bank of Kentucky Financial Corporation Announces Record Earnings for 2013

The Bank of Kentucky Financial Corporation Announces Record Earnings for 2013

Record Net Income of $5,775,000 for the Fourth Quarter, Up 15% From 2012

CRESTVIEW HILLS, Ky., Jan. 16, 2014 (GLOBE NEWSWIRE) -- The Bank of Kentucky
Financial Corporation (the "Company") (Nasdaq:BKYF), the holding company of
The Bank of Kentucky, Inc. (the "Bank"), today reported its earnings for the
fourth quarter ended December 31, 2013. For the fourth quarter and the year
ending December 31, 2013, the Company reported an increase in net income of
15% and 9% respectively compared with the same periods in 2012.

A summary of the Company's results follows:

Fourth Quarter ended December 31,    2013        2012        Change
Net income                           $5,775,000  $5,010,000  15%
Earnings per common share, basic     $0.76       $0.67       13%
Earnings per common share, diluted   $0.76       $0.66       15%
                                                          
Year ended December 31,              2013        2012        Change
Net income                           $19,765,000 $18,145,000 9%
Net income per common share, basic   $2.63       $2.43       8%
Net income per common share, diluted $2.61       $2.41       8%

Robert W. Zapp, President & CEO, commented, "In the wake of achieving record
earnings in the third quarter, we finished the year even better, setting
another record by exceeding $5.7 million in net income for the fourth quarter
and $19.7 million for the year. Several areas contributed to this achievement
including record revenue from The Bank's Wealth Advisory Group and revenue
from retail banking. In addition, it was encouraging to see momentum on the
commercial lending side, particularly since mortgage originations have
decreased in recent months.We experienced our greatest loan growth in the
fourth quarter and we believe the pipeline will remain robust with
opportunities going into 2014.Net loan growth in the fourth quarter, for
example, exceeded $48 million, helping push total loans outstanding to a
record $1.250 billion."Zapp added, "Charge-offs and non-performing loans
continue to decline, resulting in lower allowances and decreased
provisioning.The trend of improving credit metrics in 2013 not only helped
the company's financial performance, it is also a positive sign going forward
for sound growth and economic development in the markets we serve, which
benefits everyone."

The increase in net income in the fourth quarter of 2013 was primarily due to
an $800,000 (62%) decrease in the provision for loan losses and a $652,000
(12%) increase in non-interest income compared with the fourth quarter of
2012. Contributing to the decrease in the provision for loan losses were lower
levels of charge-offs and lower levels of non-performing loans compared with
December of 2012.Contributing to the increase in non-interest income were
higher service charges on deposits and trust fee income.

Non-interest income increased 12% ($652,000) in the fourth quarter of 2013,
compared with the same period in 2012, while non-interest expense decreased 1%
($78,000) from the same period last year.Contributing to the increase in
non-interest income was a $460,000 or 20% increase in service charges on
deposits, a $105,000 or 14% increase in trust fee income and a $204,000 or 90%
decrease in losses on other real estate owned, which was offset by a $529,000
or 76% decrease in gains on the sale of real estate loans. Other
non-interest income and other non-interest expense both included $180,000 in
revenue and expense related to benefits plans. The revenue reflected an
increase in investments related to benefits plans and the expense reflected an
offsetting increase in liabilities for the same benefits plans.The $180,000
was $213,000 higher than the figures from the fourth quarter of
2012.Contributing to the 3% ($178,000) decrease in salaries and benefits was
lower bonus accruals and fewer employees as compared to the fourth quarter of
2012.

Net interest income decreased $291,000, or 2% in the fourth quarter of 2013,
compared with the same period in 2012. The net interest margin, on a tax
equivalent basis, decreased 24 basis points from 3.63% in the fourth quarter
of 2012 to 3.39% in the fourth quarter of 2013. Contributing to the net
interest income in 2012 was a $247,000 loan prepayment fee received in the
quarter.This prepayment fee contributed 6 basis points to the net interest
margin for the fourth quarter of 2012. Adjusting out the 2012 prepayment fee
the net interest income remained relatively unchanged compared with the same
period in 2012, decreasing $44,000 from the fourth quarter of 2012. The
decrease in the net interest income and the compression of the net interest
margin was the result of the yield on earning assets falling faster than the
cost of interest bearing liabilities.The yield on earning assets decreased 32
basis points from 3.97% in the fourth quarter of 2012 to 3.65% in the fourth
quarter of 2013, while the cost of interest bearing liabilities only decreased
11 basis points from .44% to .33% in the same period. The decrease in the
net interest margin was partially offset with an increase in earning assets of
$58 million, or 4% on average from the fourth quarter of 2012.

The provision for loan losses decreased by $800,000 (62%) in the fourth
quarter of 2013, compared with the same period in 2012.Contributing to this
decrease were lower levels of charge-offs compared with the fourth quarter of
2012. The Company's annualized net charge-offs to average loans decreased
from .45% in the fourth quarter of 2012 to .27% in the fourth quarter of 2013
while non-performing loans as a percentage of total loans were 1.24% as of
December 31, 2013, compared with 1.61% as of December 31, 2012. The Company
recorded $826,000 in net charge-offs in the fourth quarter of 2013 compared
with $1,317,000 in the fourth quarter of 2012.On a sequential basis, the
provision for loan losses of $500,000 in the fourth quarter of 2013 was
$100,000 lower than theprovision in the third quarter of 2013, while
non-performing loans decreased from $16.4 million (1.37% of total loans) at
September 30, 2013 to $15.4 million (1.24% of total loans) at December 31,
2013.Net charge-offs on a sequential basis increased from $618,000 (.21% of
loans) in the third quarter of 2013 to $826,000 (.27% of loans) in the fourth
quarter of 2013.The majority of the charge-offs in the fourth quarter of 2013
were reserved for in previous periods. As a result of improving credit
metrics, the Allowance for Loan Losses (ALL) has decreased from 1.39% of loans
at the end of the fourth quarter of 2012 to 1.30% of loans at the end of the
fourth quarter of 2013.On a sequential basis the ALL decreased from 1.38% at
the end of the third quarter of 2013 to 1.30% at the end of the fourth quarter
of 2013, as a result of $326,000 decrease in the ALL balance and a $48 million
increase inloans outstanding.The adequacy of the ALL is analyzed quarterly
and adjusted as necessary to maintain appropriate reserves for probable
incurred losses in The Bank's loan portfolio.

Total assets were $1.857 billion at the end of the fourth quarter of 2013,
which was $13 million or 1% higher than the same date a year ago. The increase
of $54 million (5%) in total loan and $37 million (10%) in investments were
offset by a $73 million (48%) decrease in cash and cash equivalents.The
decrease in cash and cash equivalents included a $53 million (70%) decrease in
fed funds sold.The increase in assets was funded by an increase in deposits
of $18 million, or 1%.Total equity increased $10.6 million from the same date
in 2012.In September 2012, the Company's Board of Directors voted to change
from a semi-annual cash dividend to a quarterly cash dividend, commencing with
the fourth quarter of 2012.The change in the dividend frequency resulted in
cash dividends decreasing from $.79 per share in 2012 to $.69 per share in
2013 on a year to date basis.Cash dividends declared in the fourth quarter
increased $.01 (6%) to $.18 per share as compared to $.17 per share in the
fourth quarter of 2012.

The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)

                          Fourth Quarter Comparison Year ended December 31,
                                                     Comparison
Income Statement Data      12/31/13 12/31/12 % Chg   12/31/13 12/31/12 % Chg
Interest income            $15,132  $15,742  (4)%    $59,912  $62,524  (4)%
Interest expense           1,091    1,410    (23)%   4,658    6,339    (27)%
Net interest income        14,041   14,332   (2)%    55,254   56,185   (2)%
                                                                 
Provision for loan losses  500      1,300    (62)%   4,700    7,000    (33)%
Net interest income after  13,541   13,032   4%      50,554   49,185   3%
provision for loan losses
Non interest income        6,253    5,601    12%     24,011   22,421   7%
Noninterest expense       11,592   11,670   (1)%    46,745   46,338   1%
Net income before income   8,202    6,963    18%     27,820   25,268   10%
taxes
Provision for income taxes 2,427    1,953    24%     8,055    7,123    13%
Net income                 $5,775   $5,010   15%     $19,765  $18,145  9%
Per Common Share Data                                             
Diluted earnings per       0.76     0.66     15%     2.61     2.41     8%
common share
Cash dividends declared    0.18     0.17     6%      0.69     0.79     (13)%
Earnings Performance Data                                         
Return on common equity    12.86%   11.79%   107bps  11.39%   11.08%   31bps
Return on assets           1.25%    1.12%    13bps   1.10%    1.05%    5bps
Net interest margin        3.32%    3.52%    (20)bps 3.36%    3.53%    (17)bps
                                                                 

                                                           
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
                                                           
Balance Sheet Data                                          
                                          December 31, 2013 December 31, 2012
Assets:                                                     
Cash and cash equivalents                  $78,621           $151,832
Investments                                418,385           381,537
Loans held for sale                        3,214             16,324
Total loans, gross                         1,249,645         1,195,409
Allowance for loan losses                  (16,306)          (16,568)
Premises and equipment, net                22,444            22,494
Goodwill and acquisition intangibles, net  23,871            24,485
Other assets and accrued interest          77,618            68,591
receivable
Total assets                               $1,857,492        $1,844,104
                                                           
Liabilities & Shareholders' Equity                          
Total deposits                             $1,587,585        $1,570,007
Short-term borrowings                      27,643            41,408
Notes payable                              45,577            48,715
Accrued interest payable and other         15,548            13,534
liabilities
Total liabilities                          1,676,353         1,673,664
Common stockholders' equity                181,139           170,440
Total liabilities and shareholders' equity $1,857,492        $1,844,104
                                                           

                                                                  
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)

                      Average Balance Sheet Rates (presented on a tax
                       equivalent basis )
                      Quarter ended December 31,  Quarter ended December 31,
                       2013                       2012
                      Average     Interest       Average     Interest 
                      outstanding earned/ Yield/ outstanding earned/ Yield/
                      balance    paid     rate   balance    paid     rate
                                                                  
Interest-earning                                                   
assets:
Loans receivable       $1,218,140  $13,344  4.35%  $1,175,879  $14,365  4.86%
(1)(2)
Securities (2)         404,687     2,013    1.97   373,008     1,728    1.84
Other interest-earning 55,521      88       0.63   71,139      92       0.51
assets
                                                                  
Total interest-earning 1,678,348   15,445   3.65   1,620,026   16,185   3.97
assets
                                                                  
Non-interest-earning   161,014                   152,740             
assets
Total assets           $1,839,362                $1,772,766          
                                                                  
Interest-bearing                                                   
liabilities:
Transaction accounts   911,075     368      0.16   848,302     432      0.20
Time deposits          304,380     472      0.62   358,936     720      0.80
Borrowings             78,197      251      1.27   72,193      258      1.42
Total interest-bearing 1,293,652   1,091    0.33   1,279,431   1,410    0.44
liabilities
Non-interest-bearing   367,515                   324,304             
liabilities
                                                                  
Total liabilities      1,661,106                 1,603,735           
                                                                  
Shareholders' equity   178,195                   169,031             
                                                                  
Total liabilities and  $1,839,362                $1,772,766          
shareholders' equity
Net interest income               $14,354                   $14,775  
Interest rate spread                      3.32%                     3.53%
Net interest margin
(net interest income
as a percent of                           3.39%                     3.63%
average
interest-earning
assets)
                                                                  

(1) Includes non-accrual loans.
    Income presented on a tax equivalent basis using a 35.00% tax rate in 2013
(2) and 2012. The tax equivalent adjustment was $314,000 and $443,000 in 2013
    and 2012, respectively.

                                                                  

The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)

                      Average Balance Sheet Rates (presented on a tax
                       equivalent basis )
                      Year ended December31,2013 Year ended December 31,
                                                   2012
                      Average     Interest       Average     Interest 
                      outstanding earned/ Yield/ outstanding earned/ Yield/
                      balance    paid     rate   balance    paid     rate
                                                                  
Interest-earning                                                   
assets:
Loans receivable       $1,200,866  $53,570  4.46%  $1,151,139  $56,196  4.88%
(1)(2)
Securities (2)         388,878     7,253    1.87   373,029     7,412    1.99
Other interest-earning 54,235      335      0.62   65,716      334      0.51
assets
                                                                  
Total
interest-earning       1,643,979   61,158   3.72   1,589,884   63,942   4.02
assets
                                                                  
Non-interest-earning   159,153                   149,211             
assets
Total assets           $1,803,132                $1,739,095          
                                                                  
Interest-bearing                                                   
liabilities:
Transaction accounts   883,525     1,449    0.16   819,915     1,552    0.21
Time deposits          326,427     2,215    0.68   378,111     3,728    0.93
Borrowings             77,352      994      1.29   74,786      1,059    1.42
Total interest-bearing 1,287,304   4,658    0.36   1,272,812   6,339    0.50
liabilities
Non-interest-bearing   342,272                   302,520             
liabilities
                                                                  
Total liabilities      1,629,576                 1,575,332           
                                                                  
Shareholders' equity   173,556                   163,763             
                                                                  
Total liabilities and  $1,803,132                $1,739,095          
shareholders' equity
Net interest income               $56,500                   $57,603  
Interest rate spread                      3.36%                     3.52%
Net interest margin
(net interest income
as a percent of                           3.44%                     3.62%
average
interest-earning
assets)
                                                                  

(1) Includes non-accrual loans.
    Income presented on a tax equivalent basis using a 35.00% tax rate in 2013
(2) and 2012. The tax equivalent adjustment was $1,246,000 and $1,418,000 in
    2013 and 2012, respectively.

                                                                

The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)

                            Five-Quarter Comparison
Income Statement Data        12/31/13  9/30/13   6/30/13   3/31/13   12/31/12
Net interest income          $14,041   $13,922   $13,708   $13,583   $14,332
Provision for loan losses    500       600       1,600     2,000     1,300
                                                                
Net interest income after    13,541    13,322    12,108    11,583    13,032
provision for loan losses
Service charges and fees     2,782     2,829     2,581     2,131     2,322
Gain on sale of real estate  165       282       672       539       694
loans
Gain on sale of securities   --        --        --        274       --
Trust fee income             854       846       850       852       749
Bankcard transaction revenue 1,008     1,012     1,044     957       971
Gains/(losses) on other real (22)      (201)     (308)     (4)       (226)
estate owned
Other non-interest income    1,466     1,288     1,001     1,113     1,091
Total non-interest income    6,253     6,056     5,840     5,862     5,601
Salaries and employee        5,691     5,969     5,988     5,913     5,869
benefits expense
Occupancy and equipment      1,330     1,366     1,315     1,306     1,341
expense
Data processing expense      551       533       537       550       618
State bank taxes             584       615       615       575       554
Other real estate owned and  389       455       444       244       324
loan collection
Amortization of intangible   148       151       157       159       183
assets
FDIC Insurance               376       317       335       295       296
Other non-interest expenses  2,523     2,313     2,274     2,727     2,485
Total non-interest expense   11,592    11,719    11,665    11,769    11,670
Net income before income tax 8,202     7,659     6,283     5,676     6,963
expense
Income tax expense           2,427     2,244     1,798     1,586     1,953
Net income                   $5,775    $5,415    $4,485    $4,090    $5,010
Per Common Share Data                                            
Diluted earnings per common  0.76      0.72      0.59      0.54      0.66
share
Cash dividends declared      0.18      0.17      0.17      0.17      0.17
Weighted average common                                          
shares outstanding
Basic                       7,565,121 7,516,770 7,491,619 7,478,901 7,470,146
Diluted                     7,611,879 7,549,530 7,564,121 7,583,544 7,557,777
Earnings Performance Data                                        
Return on common equity      12.86%    12.44%    10.48%    9.66%     11.79%
Return on assets             1.25%     1.21%     1.00%     0.92%     1.12%
Net interest margin          3.32%     3.42%     3.38%     3.32%     3.52%
Net interest margin (tax     3.39%     3.50%     3.46%     3.40%     3.63%
equivalent)
                                                                

                                                               
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)

                       Five-Quarter Comparison
Balance Sheet Data      12/31/13   9/30/13    6/30/13    3/31/13    12/31/12
Assets:                                                         
Cash and cash           $78,621    $102,448   $80,941    $138,561   $151,832
equivalents
Investments             418,385    389,179    384,653    376,704    381,537
Loans held for sale     3,214      2,435      9,909      14,038     16,324
Total loans             1,249,645  1,201,193  1,185,449  1,187,742  1,195,409
Allowance for loan      (16,306)   (16,632)   (16,650)   (16,641)   (16,568)
losses
Premises and equipment, 22,444     22,517     22,560     22,559     22,494
net
Goodwill and
acquisition             23,871     24,018     24,169     24,325     24,485
intangibles, net
Other assets & accrued  77,618     77,066     74,859     73,223     68,591
interest receivable
Total assets            $1,857,492 $1,802,224 $1,765,890 $1,820,511 $1,844,104
Liabilities &                                                   
Shareholders' Equity:
Total deposits          $1,587,585 $1,529,505 $1,504,829 $1,558,933 $1,570,007
Short-term borrowings   27,643     32,167     26,934     28,309     41,408
Notes payable           45,577     50,695     50,702     48,709     48,715
Accrued interest
payable & other         15,548     14,606     13,196     11,604     13,534
liabilities
Total liabilities       1,676,353  1,626,973  1,595,661  1,647,555  1,673,664
Shareholders' equity    181,139    175,251    170,229    172,956    170,440
Total liabilities and   $1,857,492 $1,802,224 $1,765,890 $1,820,511 $1,844,104
shareholders' equity
Common shares           7,619,999  7,528,618  7,498,014  7,482,776  7,470,236
outstanding
Average Balance Sheet                                           
Data
Average investments     $404,687   $386,644   $387,526   $376,370   $373,008
Average other earning   55,521     29,039     46,886     86,110     71,139
assets
Average loans           1,218,140  1,199,824  1,190,590  1,194,657  1,175,879
Average earning assets  1,678,348  1,615,507  1,625,002  1,657,137  1,620,026
Average assets          1,839,242  1,771,491  1,790,043  1,811,675  1,772,766
Average deposits        1,568,764  1,506,101  1,529,159  1,551,953  1,518,557
Average interest        1,215,455  1,164,947  1,215,858  1,244,360  1,207,238
bearing deposits
Average interest
bearing transaction     911,075    848,512    882,084    892,609    848,302
deposits
Average interest        304,380    316,435    333,774    351,751    358,936
bearing time deposits
Average borrowings      78,197     80,733     74,927     75,375     72,193
Average interest        1,293,652  1,248,680  1,290,785  1,319,735  1,279,431
bearing liabilities
Average common          178,135    172,740    171,593    171,698    169,031
stockholders equity
                                                               

                                                                 
The Bank of Kentucky Financial Corporation
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)

                                    Five-Quarter Comparison
                                                                 
Asset Quality Data                   12/31/13 9/30/13 6/30/13 3/31/13 12/31/12
Allowance for loan losses to total   1.30%    1.38%   1.40%   1.40%   1.39%
loans
Allowance for loan losses to         106%     101%    88%     76%     86%
non-performing loans
Nonaccrual loans                     $15,417  $16,197 $18,934 $21,771 $19,244
Loans – 90 days past due & still     21       207     11      36      39
accruing
Total non-performing loans           15,438   16,404  18,945  21,807  19,283
OREO and repossessed assets          5,305    6,141   5,207   5,454   5,396
Total non-performing assets          20,743   22,545  24,152  27,261  24,679
Restructured loans-accruing          8,816    7,109   7,204   7,499   6,046
Non-performing loans to total loans  1.24%    1.37%   1.60%   1.84%   1.61%
Non-performing assets to total       1.12%    1.26%   1.38%   1.50%   1.34%
assets
Annualized charge-offs to average    0.27%    0.21%   0.54%   0.66%   0.45%
loans
Net charge-offs                      $826     $618    $1,591  $1,927  $1,317
                                                                 
Other Information                                                 
Total assets under management (in    836      766     747     744     714
millions)
Full-time equivalent employees       346      351     361     364     365
                                                                 

About BKFC

BKFC, a bank holding company with assets of approximately $1.857 billion,
offers banking and related financial services to both individuals and business
customers.BKFC operates thirty-two branch locations and fifty-six ATMs in the
Northern Kentucky market.

CONTACT: For more information contact:
        
         Martin Gerrety
         Executive Vice President and CFO
         (859) 372-5169
         mgerrety@bankofky.com
 
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